Looking for a local tax refund?

You might be able to get some tax money back from a city or school district.

Nathan, 17, left and Pat Luftman, both of Emmaus show us an On The Cheap tip… (APRIL BARTHOLOMEW, THE…)

July 28, 2012|Spencer Soper | On The Cheap

There's been a lot of news lately about multibillion dollar companies that pay little in taxes. The more you have, the more worthwhile it is to pay someone to comb through the tax code and find ways to protect your money with creative deductions or off-shore accounts.

But what about the little guy?

Pat Luftman of Emmaus found a clever trick that isn't going to make you a millionaire. But it might fetch enough for some pizza and a movie.

Pat discovered that those earning less than $12,000 annually can file for a local services tax refund, which is different than a refund on federal and state taxes. The local services tax, a payroll tax that goes to municipal services in the area where you are employed, varies by location. But there are statewide rules governing when refunds are in order.

It's a good thing for part-time employees to consider, as well as those with multiple jobs who may be paying the tax twice without realizing it. If you have two employers deducting the tax, you're likely to get some money back, too, regardless of how much money you earn.

"If said employee makes under $12,000 per year that tax is fully refundable to the employee," Luftman said. "The employee simply files a one-page form in the following tax year, sends it to the locality that received the tax and, poof, receives their withheld local services tax back."

There are also refunds for disabled veterans and military reservists called to active duty.

Look for the local services tax as a line item on your pay stub. It's not always listed on a W-2 tax form, Pat advises. We checked our pay stub and The Morning Call deducts $2 per pay period for Allentown's local services tax of $52 a year.

We went to Pat's house and she showed us the refund she received for her son, Nathan, 17. It was more than $35, enough for Nathan to take his girlfriend out for some pizza and a movie. Pat walks you through the steps in a video you can see at http://www.mcall.com/onthecheap.

"I wonder how many folks are missing out on getting their money back," Pat said.

We checked in with Easton accountant William Goodman about this tip. We met him at a chamber of commerce breakfast a few years back and he's become our go-to guy for complicated tax questions. He said people should check their eligibility for a refund, especially if they have multiple jobs.

The state has a form online you can fill out to request a refund. Search "local services tax refund application." The form has to be submitted to the tax collector in the municipality in which you work. Some school districts collect it as well.

We did some number-crunching in the On The Cheap lab and figure Pat's tip could save you up to $1,040 over 20 years if you're eligible. That's a lot of pizza and movies.

Now we have an important announcement from Pat Jenkins, who along with about 25 volunteers at B'nai B'rith Apartments in Allentown has sent more than 1,000 pounds of coupons to military families stationed abroad. Those families can use coupons at their base commissaries, but often have no way of obtaining them.

Pat said her group, mostly seniors and many with tendinitis, arthritis and eye problems, are having trouble keeping up with the volume of coupons donated. She'll keep accepting coupons at Mary Ann Donut Kitchen, 1601 W. Liberty St., Allentown, until Aug. 15 but she asks people not to drop them off after that.

"I'm having trouble getting the help I need, especially with the volume," Pat said. "I'd like to thank the people who have supplied the coupons over the past two years."

For those interested in sending coupons, one nonprofit still accepting them is Support Our Troops; P.O. Box 10; Weir, TX 78674-0010.